A home loan can provide you with instant funds to help you buy the house of your dreams. Theoretically, you can select a loan provider offering the best rates, flexible tenures, and suitable terms.
Now, home loans are long-tenure loans. This means you’re stuck with the loan terms you agreed to until the tenure ends. Or you can opt for a home loan balance transfer and benefit from easier loan repayments.
Read on to find out home loan balance transfer benefits, the application process, and factors to consider.
What is home loan balance transfer?
A home loan transfer or home refinancing is a facility that allows borrowers to transfer their balance loan amount to another lender offering better terms. These could mean better interest rates, flexible repayments, or better loan terms.
Note that when you opt for the home loan balance transfer, your new lending partner pays off the outstanding loan amount with the old lending partner. Then, they offer you a loan amounting to the balance amount based on their terms. Now, you can repay the loan to your new lender.
What is the home loan balance transfer process?
The balance transfer process for home loans consists of five key steps-
Choose lender
Application
Submitting the No Objection Certificate
Sharing the documents
Fee payments
Here’s a better look at each of them.
Choose lender
Before initiating the home loan transfer, borrowers like you must ensure they choose the right lender. After all, this will determine the ease of loan repayments with the new lender.
They should compare the loan terms offered by various lenders, the tenures and even the home loan balance transfer interest rate before applying. Once that is done, you can move forward to the application stage.
Application
At this step, you inform the lender at the time that they would like to transfer their loan to a different lender.
Note that some lenders will ask you to fill up an application form, while others will ask you to submit a written letter, stating the reasons for the home loan transfer. So, check with your lender about their requirements beforehand. This will ensure that the home loan transfer is smooth.
Submitting the No Objection Certificate
Once your home loan transfer application is approved, the parent lender will give you a No Objection Certificate. You must submit this consent letter and the other documents to the new lender when applying for a home loan balance transfer.
Sharing the documents
Now, apply for the home loan transfer with the new lender. Submit the consent letter, KYC paperwork, loan balance, interest statements, and property papers with the new lender.
Remember that the home loan balance transfer process can vary between lenders, and so can their documentation requirements. So, check the specifications of your new lender carefully before applying. Also, ensure your loan with the previous lender is closed before proceeding.
Fee payments
Upon confirmation from your previous lender, you can pay the necessary fees to the new loan provider and start the new contract.
Remember that loan providers can charge a pre-payment fee of up to 1-3% of the total loan amount to initiate the home loan transfer.
Why and how to use a home loan balance transfer calculator?
Home loan balance transfer benefits like lower interest rates, flexible loan tenures or better loan terms may seem like good enough reasons to opt for a new lending partner. But what if the costs incurred during the home loan balance transfer process do not justify the savings made from the lower home loan balance transfer interest rates or better terms?
In these cases, it helps confirm whether a home loan transfer is wise. And a home loan balance transfer calculator can help with it.
Essentially, the calculator is an online tool that helps you understand the savings earned through the loan transfer process. All you need to do is enter details like the outstanding loan amount, the loan tenure, the interest rate of the loan, your monthly obligations and other details.
Once you press the ‘Calculate’ button, the tool automatically displays the balance transfer amount and your final savings. In addition, some tools display your Final Total Eligibility and monthly savings as well.
With all this information about the balance transfer process for home loans at your disposal, all you need to do is choose the right lender. This is ideally a loan provider offering low home loan balance transfer interest rates, flexible tenures, transparent terms and a simple loan application process.
And Tata Capital fits the bill just right. Head to our website to learn about our home loans, application process and terms. Use our home loan balance transfer calculator to check the savings you can make with us. Then once you’re convinced, apply for a home loan refinancing with us!
31 July 2024
5 mins read
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